First time homeowners encouraged to put down deposits when buying

Reading Time: 2 minutes

Economists have advised potential first-time property buyers to consider putting down a deposit while South Africa’s interest rate is at its lowest level in over 50 years.

They have also recommended that those looking to invest in property do so within their affordability bracket.

The Head of FNB’s Home Finance Growth, Mfundo Mabaso says, “The interest rate environment really supports first time home buyers. The market has shown some resilience, so it is supportive of a buyer who is looking into getting into the market right now.”

“We want to encourage customers to make sure they are buying within their affordability bracket that will also support them should their interest regime move up. As it gets a little more expensive, and we think that it will, the environment will normalise and the rates will go up,” adds Mabaso.

More house repossessions are expected in 2020 as many people have lost their jobs due to the impact of COVID-19.

According to research conducted by Personal finance website Just Money, about 34% of respondents say that their family earnings were significantly affected by the lockdown.

According to the law if you default for three months or more on your monthly home loan payments the bank may repossess your house and sell it to recover the outstanding money owed.

In the past, repossessed homes were sold without a reserve price meaning the banks could sell your house for much less than it was worth.

And you will still be liable for the outstanding debt.

This left customers with a potentially lifelong debt but now more stringent rules have been put in place to protect homeowners.

Just Money Commercial Manager Sarah Nicholson says: “The government has put a lot of measures in place the bank cannot just take your home without notifying you, you need to try and prevent this.”

About 68% of the respondents say that their savings will only last them up to one month if they were to lose their jobs.

Challenges faced by homeowners during tough times: